House passes Credit Cardholders Bill of Rights

The House today voted 357-70 to pass H.R. 627, the Credit Cardholders’ Bill of Rights, which will require credit-card companies to give 45 days notice of all interest rate increases and significant fee changes; prevent credit-card companies from unfairly increasing interest rates on existing balances; end unfair “double cycle” billing practices; require card companies to mail billing statements 21 days before the due date; and prohibit companies from charging a fee when customers pay their bills.

“I’ve heard from many people that have had their credit card interest rate sky-rocket without due notice or explanation. At a time when Americans are struggling to make ends meet, they shouldn’t have the additional worry of a sudden hike in their interest rate or unexpected fees without notice. This bill will help protect Americans from these unfair practices.”

“At a time when families are struggling economically and are increasingly dependant on their credit cards, major credit card companies should not be allowed to continue to play games with cardholder due dates and misleading information. Americans deserve and need common sense control over their credit cards so they can make the best and most responsible choices for their families and meet their borrower obligations. I’m pleased so many House members voted in favor of protecting Americans from deceitful and dishonest credit card activities and I hope the Senate will follow suit shortly and pass this bill as well.”

“I believe that the critical protections contained in this legislation will strengthen the regulations issued by the Federal Reserve and I strongly support its passage. However, I am concerned that during these incredibly difficult and challenging economic times, our constituents are increasingly being squeezed with egregious fees and dubious business practices by the very banks that their tax dollars have been bailing out.

“The newspapers are rife with stories about consumers being gouged by banks that have suddenly jacked up interest rates on their credit cards, imposed new monthly service charges or reduced credit limits with little or no explanation. In most cases these tactics are being used on consumers, who although they carry a balance from month to month, pay their bills on time and make at least their minimum payment. We’ve also heard countless stories of bait and switch tactics by credit card companies who suddenly raise interest rates because a consumer is a few days late in paying another creditor.

“Years ago, I worked with now Senator Sanders on legislation to address this practice of so called ‘universal default’. I’m pleased that language is in this bill, but it is critical that the protections banning this practice are put into place immediately.

“Originally this bill contained a three month window following the date of enactment to allow banks to adjust their systems and comply with the law. However, the bill that we have now before us would allow these practices to continue as much as 1 year after the enactment of this bill, or June 30, 2010 – whichever comes first. I am concerned that this one year delay incentivizes the banks to accelerate the use of these egregious tactics to ensure that they can reap the maximum amount of money possible from our constituents.

“The fact is that the banks know the handwriting is on the wall. They are boosting up fees and rates on consumer now. The longer we wait to ban these practices the more our constituents will suffer. To me and many people across this country, that is outrageous and unacceptable.

“If they can raise interest rates on credit card holders overnight for no reason whatsoever, then they should be able to comply with these restrictions in an equally swift manner. More importantly, if we can take extraordinary measures to bailout the banking industry for their greed and mismanagement, the least we can do is ensure that they don’t fleece our constituents with higher rates and fees.”

“The Credit Cardholder’s Bill of Rights will help stimulate the economy by putting more dollars in the hands of consumers and not into the coffers of major credit card companies. These companies will no longer be allowed to penalize cardholders who pay on time, or shift allocation of payments to maximize interest rates. Congress has already taken urgent steps to bail out our financial system. It’s time to throw a life preserver to families struggling to tread water in the rising tide of consumer debt. There’s no doubt in my mind that America must go on a ‘credit diet,’ but two-thirds of our national economy is based on consumer spending, making credit cards, how they are used and what people are charged in that usage, very important.

“Good, stable credit card customers have watched as their existing balances triple and even quadruple — without warning and without justification. Today, Congress has the opportunity to bring equity and rationale to our credit card system and provide immediate financial relief to millions of Americans.”

“All across our country families are struggling right now. Many have seen their home values plummet, others have had loved ones lose their jobs, and almost all families are facing steep declines in their savings and retirement accounts. The last thing that they should have to deal with is some irresponsible credit card company preying on their vulnerability.

“This is a common sense bill that will make a difference in the lives of millions of Americans. It will provide consumers with the information and protections that they need to take responsibility for their own finances, and prevent card companies from taking advantage of them.”

Josh Richman

Josh Richman covers state and national politics for the Bay Area News Group.
A New York City native, he earned a bachelor’s degree in journalism from the University of Missouri and reported for the Express-Times of Easton, Pa. for five years before coming to the Oakland Tribune and ANG Newspapers in 1997.
He is a frequent guest on KQED Channel 9’s “This Week in Northern California;” a proud father; an Eagle Scout; a somewhat skilled player of low-stakes poker; a rather good cook; a firm believer in the use of semicolons; and an unabashed political junkie who will never, EVER seek elected office.